WHEN PENGUINS FLEW AND WATER BURNED This is the true memoir of one US Air Force navigator’s journey from the schoolhouses of Air Training Command to the nuclear alerts of the Cold War to combat in a 35-year-old anachronism called the B-52. It is a first-hand account of life during the last days of Strategic Air Command, the early days of Air Combat Command and the ensuing military drawdown of the 1990s. From peacetime training exercises across the globe to combat operations in Desert Storm, Jim Clonts takes the reader inside the cockpit where life and death are seconds apart. Often comical, sometimes heart-pounding, other times tragic, WHEN PENGUINS FLEW AND WATER BURNED takes you into the world of military aviation, a crucible where warriors learn the true nature of character, conscience and mortality.

Friends of Liberty VOL 20
by Jim Clonts, 2009

08/20/2009

Let's step back from the rhetoric of the healthcare debate and look at this concept objectively. Democrats argue that a Government plan will have cost advantages over private sector companies who have to generate profits, which they refer to as obscene. The argument that a not-for-profit Government will run healthcare better than a for-profit company may convince a class of third graders, but anyone who has stood in line at the post office knows better. If it absolutely has to be there, you call Fedex or UPS. President Obama inadvertantly made this point in a speech last week.

If history has shown us anything, it is if you remove the possibility of profit, you remove the incentive to improve, the incentive to operate as efficiently as possible, the incentive to keep your customers happy. With no fear of bankruptcy, the Government system won't care about any of the above. We will be reduced to a line item in the Federal Budget, biological machines in need of repair from time to time, with care rationed as the budget dictates. Everything else the Government does is limited by budget constraints. Why would healthcare be any different?

There seems to be a fundamental misunderstanding of how insurance companies work. Insurance companies are in the business to make money for their stock-holders. This means they have incentive to operate as efficiently as possible while keeping their customers happy and alive. A dead customer stops paying.

Insurance companies also take a portion of their customers' premiums and invest them in stocks, bonds and other financial vehicles, keeping a mandatory reserve of capital on-hand to cover immediate claims. This injects capital into the economy, creating new businesses, new products, stimulating job growth and earning a return on investment. The money paid in premiums does not sit idly in a holding account waiting to be doled out. It is put to work to create more capital, to produce. It is the essence of capitalism and the revenue generated from investments allow insurance companies to cover their claims while creating jobs and growth and returning profit for their stockholders, if successful, obscene profit.

The Federal Government is $12 trillion in debt and still borrowing. It has no mechanism for creating capital, nor does Congress have any inclination to create any. There is no way Congress would consider investing tax revenue back into the private sector economy, no matter what the promised return. The only place Government can get the funding required for healthcare is through higher taxes and increased borrowing. Frankly, they can?t tax enough to cover the projected cost of the Democrat's plan. The Government does not invest or create capital. It loots from those who do and they're not going to be able to steal enough to make this work. Although the Government can print money, for every dollar they print, they devalue the existing dollar. That is simple mathematics.

The bottom line is that healthcare represents about one sixth of our entire GDP. That one sixth is integral to the growth and strength of our economy through the actions and investments of insurance companies, healthcare providers, pharmaceutical and other ancillary private sector health-related companies. Relegating this one-sixth of GDP to a line item on the Federal budget will remove trillions of dollars of true "economic stimulus" from the economy and have far reaching intended and unintended effects on our productivity and the utilization of investment capital.

The notion that companies will see a windfall by ending healthcare insurance for their employee is a false promise. Here's a prediction for you: If the public option is passed, companies will drop their employee coverage and will indeed initially show increased profits. (State governments and municipalities will also jump to get their people on the Federal healthcare plan.) Companies' stock prices will inflate, investors will take huge profits, 401 Ks will surge, massive numbers of baby-boomers will retire and the Obama Administration will take credit for the great recovery. The recovery will be the result of a simple transfer of debt from the private sector to the public. The profits will not come from increased productivity or improved operation. Then, as record profits are recorded, these same companies and investors will be vilified as greedy by the Democrats, Unions and the Administration. Personal income, capital gains and corporate income taxes will rise accordingly. Windfall taxes and value-added taxes will be levied.

The artificial surge of 401K and IRA values that send large numbers of Boomers into retirement will have two unintended consequences. First, when these large numbers retire, they will accelerate the drain on Social Security, moving it closer to bankruptcy, perhaps pushing it over the edge. Secondly, the largest generation in history will move from being producers of wealth to being consumers of wealth. This has a double impact on the economy as well as the Government, as tax revenues from their activities evaporate at the same time they begin to draw wealth from Government entitlement programs.

Tax rates will skyrocket just to keep the Government from losing ground as GDP shrinks. The irony is every tax that is levied will result in reduced tax revenues by providing disincentives for whatever activities are taxed. A sure-fire way of reducing any activity is to tax it. The more people who lose their jobs and go on the public dole, the greater the need for tax revenues, the higher the taxes must go, the less revenue they collect. It is a viscous cycle which our liberal friends have never understood.

JC

Question of the Week: Would you buy car insurance from a company that says they offer the lowest rates, have never made a profit, are $12 trillion dollars in debt and will have to borrow from the Chinese to pay for any damage to your vehicle...if they deem it's worth fixing your vehicle at all? If you won't trust your car with this company...why trust your life...or your kids'?

Quote of the Week:

"It's not that our liberal friends are ignorant. They just know so much that isn't so."

-Ronald Reagan

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